The speed and extent of the decline in prices for key Dairygold products internationally was higher than expected, according to Dairygold CEO Michael Harte.

Speaking at a member information meeting in the Firgrove Hotel in Mitchelstown on Thursday 25 September, Harte explained to suppliers that in the four weeks since the previous board meeting and the announcing of August’s milk price, there was a significant reduction in certain global dairy market prices.

Dairygold said that society members were given a comprehensive and detailed account of the reductions and the related impact on milk price, which the co-op cut by 2.85c/l excluding VAT for the month of August.

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“Dairygold sells a significant volume of commodity dairy products on international markets and the speed and extent of the decline in prices for key Dairygold products in those markets over the four weeks since the previous board meeting were much greater than anticipated,” Harte said.

From 13 August to 17 September, butter price fell by 20%, from €7,000 to €5,600 or €1,400/tonne, while cheese price fell by 10.4% from €4,410 to €3,950 or €460/tonne, according to Dairygold. The result, the co-op said, was that at the time of the milk price decision, key Dairygold products saw market prices fall by well over 3c/l.

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Dairygold has acknowledged that the timing of the market falls are “particularly challenging”, as they come just after peak milk processing, where the industry has higher levels of stock, exposed to a declining market.

“Dairygold produces a high volume of cheese, including mature cheddar, which was produced with milk purchased earlier in the year and now the finished product has to be sold into a declining market.

“We understand the impact that this difficult decision will have on our milk suppliers, it is a significant reduction.

“However, Dairygold had to take account of the market returns and align its milk price accordingly.”

Speaking to the Irish Farmers Journal after last Thursday’s meeting, dairy farmer Colm O’Leary said that he went to Mitchelstown, along with many others, to get an update from his board and CEO on why they felt the need to make such a sharp price correction.

“We got a comprehensive and thorough explanation. I have full confidence in the board and management. I also take serious umbrage to anyone co-opting me to lend weight to their criticisms,” O’Leary said.